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XIII NATIONAL LAW SCHOOL-TRILEGAL INTERNATIONAL ARBITRATION

MOOT, 2020

BEFORE THE ARBITRAL TRIBUNAL

Under Singapore International Arbitration Centre (SIAC) Rules, 2016 at Bengaluru, India

IN THE MATTER BETWEEN

ABC GMBH (Claimant)

V.

NATIONAL POLICE PROCUREMENT CORPORATION (Respondent)

MEMORANDUM FOR RESPONDENT

MEMORANDUM for RESPONDENT [TABLE OF CONTENTS]

TABLE OF CONTENTS

TABLE OF ABBREVIATIONS ....................................................................................... IV

INDEX OF AUTHORITIES ............................................................................................. VI

STATEMENT OF JURISDICTION ............................................................................. XIX

STATEMENT OF FACTS ..............................................................................................XX

ISSUES RAISED ......................................................................................................... XXIV

SUMMARY OF ARGUMENTS ................................................................................... XXV

ARGUMENTS ADVANCED ............................................................................................. 1

I. THE ARBITRAL PROCEEDINGS SHOULD BE STAYED PURSUANT TO THE SUPREME

COURT’S ORDER................................................................................................................ 1

A. The Supreme Court was well within its powers to stay the proceedings ................... 1

B. The Tribunal should put the Proceeding in Abeyance in accordance with the Principle
of judicial comity ........................................................................................................... 2

C. The Tribunal should not adjudicate this dispute since it violates ‘Rights in rem’ ..... 3

1. The law governing the Arbitration Agreement will be Filandrian Law ................. 3

2. Disputes affecting in rem Rights are Non-Arbitrable under Filandrian Law ......... 3

D. The Tribunal should render an enforceable award .................................................. 4

II. PUBLIC DISCLOSURE SHOULD BE ALLOWED ............................................................. 5

A. Public Disclosure of documents does not violate Rule 39 SIAC ............................... 6

B. Public disclosure of documents shall further the ongoing court proceedings in

Filandria ........................................................................................................................ 7

C. Public Interest Implications precede the duty of Confidentiality .............................. 7

D. The defense of commercially sensitive information cannot be granted to the Claimant

............................................................................................................................... 8

III. THE ISSUE OF VALIDITY OF CONTRACT IS NON-ARBITRABLE...................................... 9

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MEMORANDUM for RESPONDENT [TABLE OF CONTENTS]

A. The Tribunal does not have jurisdiction to arbitrate over the validity of the Contract
............................................................................................................................... 9

B. If the Tribunal is of the opinion that it has Jurisdiction, even then the Claims are
Inadmissible and hence not Arbitrable ......................................................................... 11

C. Arbitrating over this dispute will violate principles of public policy ...................... 12

D. Arbitrating over this dispute will be against the doctrine of clean hands ............... 12

E. The unsettled position of the object of the Contract in question prevents the Tribunal
from arbitrating over the validity of the Contract ......................................................... 13

IV. NPPC IS NOT IN BREACH OF ITS OBLIGATIONS UNDER CLAUSE 3(1)(B), 3(1)(C) AND

3(1)(D) ............................................................................................................................. 14

A. All due payments were made to the Claimant in the stipulated time ....................... 14

B. The third tranche of drones was rejected by the Respondent and the Contract was
frustrated ..................................................................................................................... 15

1. The Respondent rejected the drones due to their defect ...................................... 15

2. The Contract was frustrated because the object of the Contract was defeated ..... 16

C. The Respondent is not liable to pay the amount lost in the Phishing attack ............ 17

1. The fraud was committed by a third party .......................................................... 17

2. The Email account of Ms. Jenny Liu was compromised because of her own
negligence ................................................................................................................ 17

3. There were security gaps in the IT system of the Claimant................................. 18

4. The Respondent intended to make a successful transfer ..................................... 19

V. ABC GMBH IS IN BREACH OF CLAUSE 1 OF THE AGREEMENT................................ 19

A. There was an implied condition as to the quality of goods as the drones were sold on
description ................................................................................................................... 20

1. There was an implied condition as to the quality of the goods ............................ 20

2. The purpose for purchasing the drones was communicated to the Claimant ....... 20

3. The Respondent relied on the skill and judgement of the Claimant .................... 21

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MEMORANDUM for RESPONDENT [TABLE OF CONTENTS]

B. The Respondent is entitled to remedy under the SOGA 1930 and the defence of Clause
10 or 11 of the Contract is not available to the Claimant.............................................. 21

1. The damage was the result of the breach of Clause 1 ......................................... 22

2. The event that led to the malfunctioning of drones was reasonably foreseeable .. 22

3. The resulting damages were not remote ............................................................. 23

PRAYER .................................................................................................................... XXVII

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MEMORANDUM for RESPONDENT [TABLE OF ABBREVIATIONS]

TABLE OF ABBREVIATIONS

§ Section

¶/¶¶ Paragraph/Paragraphs

& And

AIR All India Reporter

Annx Annexure

am Ante Meridiem

Anr. Another

Art. Article

CC Carbon Copy

CISG The United Nations Convention on Contracts for the International

Sale of Goods

Co. Company

Corp. Corporation

GmBH Gesellschaft mit beschränkter Haftung (Company with limited

liability)

Hon’ble Honourable

ICC International Chamber of Commerce

Id ibidem

i.e. id est (that is)

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MEMORANDUM for RESPONDENT [TABLE OF ABBREVIATIONS]

IT Information Technology

KB King’s Bench

Ltd. Limited

NPPC National Police Procurement Corporation

NYC New York Convention

O365 Microsoft Office 365

Ors. Others

PCA Prevention of Corruption Act

PM Particulate Matter

pm Post meridiem

p./pp. Page/Pages

Pvt. Private

QB Queen’s Bench

SC Supreme Court

SCC Supreme Court Cases

SIAC Singapore International Arbitration Centre

UN United Nations

UNCITRAL The United Nations Commission on

International Trade Law

v Versus

vol. Volume

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

INDEX OF AUTHORITIES

ARTICLES

CITED AS FULL CITATION PAGE NO.

Cremades & Bernado Cremades and David Caims, ‘Transnational public 6

Caims policy in international arbitral decision-making: The cases of
bribery, money laundering and fraud’ in Kristine Karsten and
Andrew Berkeley, Arbitration, Money Laundering,
Corruption and Fraud (2003)

Hiber & Pavic Dragor Hiber and Vladimir Pavic, ‘Arbitration and Crime’ 7
(2008) 25(4) Journal of International Arbitration

Hwang & Michael Hwang and Katie Chung, ‘Defining the Indefinable: 6, 7
Chung Practical Problems of Confidentiality in Arbitration‖’, (2009)
26(5) J. of Int’l Arb. 609

Knoll Jocelyn L. Knoll and Shannon L. Bjorklund, 'Force Majeure 22

and Climate Change: What is the New Normal?', (2014) 8(1)
American College of Construction Lawyers Journal

Rab Ajar Rab, ‘Defining the Contours of the Public Policy 3

Exception- A new test for arbitrability in India’, (2019) 7(2)
IJAL

Schultz & Ridi Schultz, Thomas and Ridi, Niccolo ‘Comity and International 2
Courts and Tribunals,’ (2017) 50 Cornell International Law
Journal

Waincymer Jeffery Waincymer, 'International Commercial Arbitration 4

and the Application of Mandatory Rules of Law', (2009) 5(1)
Asian International Arbitration Journal

XIII NLS-TRILEGAL INTERNATIONAL ARBITRATION MOOT, 2020 PAGE | VI

MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Weixia Gu Weixia, ‘Confidentiality Revisited: Blessing or Curse in 7, 8

International Commercial Arbitration?’, 15 The American
Review of International Arbitration

Zweighaft David Zweighaft, ‘Business email compromise and executive 17

impersonation: are financial institutions exposed?’, (2017)
18(1) Journal of Investment Compliance

BOOKS

CITED AS FULL CITATIONS PAGE NO.

Anson J. Beatson, A. Burrows, J. Cartwright, Anson's Law of 17, 23

Contract, 29th ed., Oxford University Press (2010)

Baizeau & Domitille Baizeau, Richard Kreindler, Addressing the issues 11

Kreindler of Corruption in Commercial and Investment Arbitration,
Vol. 13, Wolters Kluwers (2015)

Berg Albert Jan Van den Berg, Improving the Efficiency of 4, 13

Arbitration Agreements and Awards: 40 Years of Application
of the New York Convention, ICCA Congress Series, 1998
Paris Vol. 9, Kluwer Law International (1999)

Bianca Bianca, Cesare M. Bonel, Michael, Commentary on 21

International Sales Law, Fred B Rothman & Co. (1987)

Black’s Law Bryan A. Garner (ed.), Black’s Law Dictionary, West Group 2
Dictionary (1996)

Böckstiegel K. Böckstiegel, Arbitration in Germany, 2nd edn., Kluwer 11

Law International (2014)

Born Gary B. Born, International Commercial Arbitration, 2nd ed., 11

Kluwer Law International (2014)

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Cheshire Michael Furmston, Cheshire, Fifoot & Furmston's Law of 4, 23

Contract, 16th ed., Oxford University Press (2012)

Derains & Yves Derains, Eric A. Schwartz, A Guide to the ICC Rules of 4
Schwartz Arbitration, 2nd ed., Kluwer Law International (2005)

Fellmeth & Aaron X. Fellmeth and Maurice Harwitz, Guide to Latin in 12

Harwitz international Law, Oxford University Press, (2011)

Gaillard & Emmanuel Gaillard, John Savage, Fouchard Gaillard 11, 12

Savage Goldman on International Commercial Arbitration, 1st ed.,
Kluwer Law International (1999)

Gaillard & E. Gaillard and D. Di Pietro, Enforcement of Arbitration 12

Pietro Agreements and International Arbitral Awards, Cameron
May Ltd. (2008)

Goldman Berthold Goldman, 'The Complementary Roles of Judges and 11

Arbitrators in Ensuring that International Commercial
Arbitration is Effective' in International Arbitration – 60
Years Of Icc Arbitration – A Look At The Future, Volume
412, ICC Publishing S.A. 1984

Halsbury's Halsbury's Laws of England, Vol. 16, 4th ed., LexisNexis 12

(2003)

Jarvin & Sigvard Jarvin, Yves Derains, Collection of ICC Arbitral 11, 12
Derains Awards 1974-1985, 1st ed., Kluwer Law International (1994)

Karsten and Kristine Karsten and Andrew Berkeley, Arbitration, Money 6

Berkeley Laundering, Corruption and Fraud, ICC Dossiers, Vol. 1,
Kluwer Law International (2003)

Kronke & Herbert Kronke, Recognition and enforcement of foreign 3

Nacimiento arbitral awards: a global commentary on the New York
Convention, Alphen aan den Rijn (2010)

XIII NLS-TRILEGAL INTERNATIONAL ARBITRATION MOOT, 2020 PAGE | VIII

MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Malhotra Indu Malhotra, O.P. Malhotra on The Law & Practice of 12

Arbitration and Conciliation, 3rd ed., Thomson Reuters (2015)

Mulla I Akshay Sapre, Pollock & Mulla The Sale of Goods Act, 10th 20, 21, 22
ed., LexisNexis (2017)

Pollock & Nilima Bhadbhade, Pollock & Mulla The Indian Contract and 4, 13
Mulla Specific Relief Acts, Vol. 1, 14th ed., LexisNexis (2012)

Redfern & Alan Redfern & Martin Hunter, Law and Practice of 5
Hunter International Commercial Arbitration, 4th ed., Thomson
Sweet & Maxwell (2004)

Sanders Pieter Sanders, Congress Series: Comparative Arbitration 12

Practice & Public, Vol 3, Kluwer Law International (1987)

Sauvant K. Sauvant, Yearbook of International Investment Law, 7

Oxford University Press (2013)

Sayed Abdulhay Sayed, Corruption in International Trade and 11

Commercial Arbitration, Vol. 1, Kluwer Law International
(2004)

Schwenzer Ingeborg Schwenzer, Christopher kee, Pascal Hachem, 23

Global Sales and Contract Law, 1st ed., Oxford University
Press (2012)

Tackaberry & John Tackaberry and Arthur Marriott, Bernstein's Handbook 2

Marriott of Arbitration and Dispute Resolution Practice, 3rd ed., Sweet
and Maxwell (1998)

CONVENTIONS, RULES & STATUES

CITED AS FULL CITATION PAGE NO.

ACA 1996 The Arbitration and Conciliation Act 1996 1

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

CISG 1980 The United Nations Convention on Contracts for the 20

International Sale of Goods 1980

COI 1950 The Constitution of India 1950 2

GFR 2017 General Financial Rules 2017 6, 10

ICA 1872 The Indian Contract Act 1872 13, 16

ICC 2017 International Chamber of Commerce Rules of Arbitration 5

2017

NYC 1958 New York Convention 1958 1, 5

PCA 1988 The Prevention of Corruption Act 1988 6, 9

SIAC 2016 Singapore International Arbitration Centre Rules 2016 4, 5, 6

SOGA 1930 The Sale of Goods Act 1930 15, 17,

20, 22

WBPA 2014 The Whistle Blowers Protection Act 2014 6

OTHER AUTHORITIES

CITED AS FULL CITATION PAGE NO.

Bribery & Bribery &Arbitrators’s Task Kluwer Arbitration Blog, 13

Arbitrator’s October 11, 2011
Task <[Link]
bery-and-an-arbitrators-task/>

DKIM Sirkku Willie, 'Use DKIM to validate outbound email sent 19

from your custom domain' <[Link]
us/microsoft-365/security/office-365-security/use-dkim-to-
validate-outbound-email?view=o365-worldwide>

DMARC Sirkku Willie, 'Use DMARC to validate email' 19

<[Link]

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

365/security/office-365-security/use-dmarc-to-validate-
email?view=o365-worldwide>

ILAIAC The International Law Association International Arbitration 6

Report Committee’s Interim Report on ―Public Policy as a Bar to
Enforcement of International Arbitral Awards (2000)

JDI Journal de droit International, vol. 111 (1984) p. 914 11, 12

JIA Journal of International Arbitration, vol. 24 (2007) p. 6 13

Lovinfosse Olivia de Lovinfosse, 'Arbitration and Confidentiality: 7

Illusion or Disillusion'

SPF Ajayan Borys, 'How Microsoft 365 uses Sender Policy 18

Framework (SPF) to prevent spoofing'
<[Link]
365/security/office-365-security/how-office-365-uses-spf-to-
prevent-spoofing?view=o365-worldwide#HowSPFWorks>

WLR Weekly Law Resports, vol. 1 (1988) p. 1256 12

ICC AWARDS

CITED AS FULL CITATION PAGE NO.

ICC 2730 ICC Case No. 2730 (1982) 11, 12

ICC 3913 ICC Case No. 3913 (1981) 11, 12

ICC 3916 ICC Case No. 3916 (1982) 11, 12

ICC 5943 ICC Case No. 5943 (1990) 11

ICC 6474 ICC Case No. 6474 (1992) 12

ICC 9987 ICC Case No. 9987 (2004) 3

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

ICSID CASES

CITED AS FULL CITATION PAGE NO.

Gustav Gustav F W Hamester GmBH & Co. KG v Republic of 13

Guinea, ICSID Case No. ARB/11/29

Societe Societe Generale De Surveillance S.A. v Republic of 2

Generale Philippines, ICSID Case No. ARB/02/6

World Duty World Duty Free Company v Republic of Kenya, ICSID Case 11, 13
Free No. ARB/00/7

INDIAN CASES

CITED AS FULL CITATION PAGE NO.

Al Faheem Nagar Nigam v Al Faheem Meat Exports Pvt. Ltd., (2006) 10

13 SCC 382

Arunima Arunima Baruah v Union of India, (2007) 6 SCC 120 13

Ayyasamy A. Ayyasamy v A. Paramasivam & Ors., (2016) 10 SCC 386 10, 12

Booz Allen Booz Allen & Hamilton Inc. v SBI Home Finance Ltd., 3
(2011) 5 SCC 532

Dhanrajamal Dhanrajamal Gobindram v Shamji Kalidas and Co., AIR 16

1961 SC 1285

Eternit Everest Eternit Everest Ltd. v CV Abraham, AIR 2003 Ker 273 21

General Officer General Officer Commanding v CBI and Anr, AIR 2012 SC 2
1890

Global Rescue Global Rescue Foundation v UOI, (2019) MANU (Del) 4549 10

Gujarat Gujarat Maritime Board v L&T Infrastructure Developments 9

Maritime Projects Ltd. & Ors., (2016) 10 SCC 46

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Himadri Himadri Chemicals Industries Limited v Coal Tar Refining 10

Chemicals Company, (2007) 8 SCC 110

Hindustan Hindustan Construction Co. v State of Bihar, AIR 1963 Pat 15

Construction 254

Jaffer Jaffer Meher Ali v Budge Budge Jute Mills Co., (1907) 34 13
Cal. 280

Manglaram Manglaram Namsudra v Permananda Namsudra, AIR 1972 15

A&N 10

Minerals Minerals and Metals trading Corpn. Ltd. v Dimple Overseas 15

Ltd., AIR 2001 Del 427

Pakhar Singh Pakhar Singh v Kishan Singh, AIR 1974 Raj 112 15

Puttaswamy K.S. Puttaswamy and Anr. v Union of India and Ors. (2017) 4
10 SCC 1

Radhakrishnani N. Radhakrishnan v Maestro Engineers & Ors., (2010) 1 10

SCC 72

Ram & Shyam Ram and Shyam Co. v State of Haryana, (1985) 3 SCC 267 10
Co.

Rrb Energy Rrb Energy Limited v Vestas Wind Systems and Anr, (2015) 10
SCC OnLine (Del) 8734

Sarabji Sorabjee Hormusha Joshi & Co v VM Ismail & Anr, AIR 20

1960 Mad 520

Satyabrata Satyabrata Ghose v Mugneeram Bangur & Co., AIR 1954 16

Ghose SC 44

Skipper DDA v Skipper Construction, (2010) 15 SCC 447 2

Construction

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Ssangyong Ssangyong Engineering & Construction Co. Ltd. v National 2

Engineering Highway Authority of India (NHAI), AIR 2019 SC 5041

Swiss Timing Swiss Timing Ltd. v Organising Committee, 13

Commonwealth Games 2010, (2014) 6 SCC 677

Umadevi Secretary, State of Karnataka & Ors. v Umadevi & Ors., AIR 2
2006 SC 1806

World Sports World Sports Group v MSM Satellite, AIR 2014 SC 968 2
Group

UNITED KINGDOM CASES

CITED AS FULL CITATION PAGE NO.

Albon Albon (t/a NA Carriage Co.) v Naza Motor Trading Sdn Bhd, 2
[2007] ECWA Civ. 1124

Ali Shipping Ali Shipping Corp. v Shipyard Trogir, [1998] 2 All E.R. 136 7
Corp

Armagas Armagas v Mundogas, [1986] 1 A.C. 717 11

Blackmore Richardson & Anr v Blackmore, [2005] EWCA Civ. 1356 13

Blanche Blanche v Nash, [1836] 1 M&W 545 16

Chanter Chanter v Hopkings, [1838] 5 M&W 399 20

Chartered The Chartered Institute of Arbitrators v B and others, [2019] 7

Institute of EWCH 460
Arbitrators

City of City of Moscow v Bankers Trust Co., [2004] 1 CLC 1099 7

Moscow

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Claxton Claxton Engineering Services Ltd. v TXM Olaj-Es 1

Engineering GazkutatoKft, [2011] EWHC 345
Services

Cointat Cointat v Myham & Son, [1913] 3 KB 220 21

Crescent National Iranian Oil Company v Crescent Petroleum 11

Petroleum Company International Ltd. & Crescent Gas Corporation
Company Ltd., [2016] EWHC 510

Deutsche Deutsche Schachtba-und Tiefbohr-Gesellschaft M.B.H. v Ras 12

Schachtba- Al Khaimah National Oil Co., [1987] 2 LLR 246, 254
und

Dobell & Co. Dobell & Co v Barber &Garrat, [1931] 1 KB 2019 (CA) 22

Elektrim S.A. Elektrim S.A. v Vivendi Universal S.A. & Ors., [2007] 1
EWHC 571

Francome Francome and Another v Mirror Group Newspaper Ltd. and 8, 9

Others, [1981] 2 All ER 32

Habas Sinai Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC 3

Steel Company Ltd., [2013] EWHC 4071

Hadley Hadley v Baxendale, [1854] 9 Exch 341, 354 23

Honeywell Honeywell International Middle East Ltd. v Meydan Group 11

LLC, [2014] 2 LLR 133

Intermet Intermet FZCO & Ors. v Ansol Ltd. & Ors., [2007] EWHC 1
FCZO 226

Jones Jones v Just, [1868] LR 3 QB 197 21

LogicRose LogicRose Ltd v Southend United Fc Ltd., [1988] 1 WLR 11

1256

London Re London School of Electronics Ltd., [1986] Ch 211 13

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Nayyar Nayyar v Denton Wilde Sapte, [2010] LLR 139 12

Panama & Panama & South Pacific etc. v India etc. Works Company, 11
South Pacific [1875] 10 Ch. App. 515

Randall Randall v Newson, [1877] 2 QBD 102 (CA) 22

Richardson Richardson v Mellish, [1824] 2 Bing. 229 12

Riddick Riddick v Thames Board Mills Ltd., [1977] QB 881 8

Sana Hussain Sana Hussain Sabbagh v Wael Said Khoubry, [2019] ECWA 1
Sabbagh Civ. 1219

Shashoua Roger Shashoua v Mukesh Sharma, [2009] ECA 2

South South Carolina Insurance Co. v Assurantie Maatshappij De 1

Carolina Zeven Provincien NV, [1987] AC 224
Insurance

Spencer Spencer Trading Co. Ltd. v Devon (Fixol and Stickphast Ltd, 21
Trading Co. Third Parties), [1947] 1 All ER 284

Sulamérica Sulamerica Cianacion Al De Seguross A. v Enesaen Genharia 3

S.A., [2012] ECWA Civ 638

Tigris Tigris Intl v China Southern Airlines Co. Ltd., [2014] EWCA 11
Civ 1649

Victoria Victoria Laundary (Windsor) Ltd. v Newman Industries Ltd., 23

Laundary [1949] 2 KB 528

Weissfisch Weissfisch v Julius, [2006] ECWA Civ. 218 2

UNITED STATES CASES

CITED AS FULL CITATION PAGE NO.

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

Beau Beau Townsend Ford Lincoln Inc. v Don Hind Fords Inc., 17
Townsend [2017] U.S. Dist. LEXIS 156360

Broome Broome Construction, Inc. v United States, 203 Ct. Cl. 521, 22
Construction 492 F.2d 829

Cape Ann Cape Ann Granite Co. v United States, 100 Ct. Cl. 53 22

Loucks Loucks v Standard Oil, [1918] N.Y. LEXIS 862 12

Panhandle United States v Panhandle Eastern Corp., 119 F.R.D. 7

Eastern

Parsons & Parsons & Whittemore Overseas Co. Inc. v Societe Generale 12
Whittemore de L’Industries du’ Papier, 508 F.2d 969

OTHER CASES

CITED AS FULL CITATION PAGE NO.

Ang Yee Foo Jong Long Dennis v Ang Yee Lim, [2015] 2 SLR 578 8

BCY BCY v BCZ, [2016] SGHC 249 3

Dockyard Cocatoo Dockyard Pty. Ltd. v The Commonwealth of 7

Australia and Another, (2001) NSWCA 468

Esso Esso Australia Resources Ltd. v Plowman, (1995) 183 CLR 7, 8

10

Himpurna Himpurna California Energy Ltd. v PT (Persero) Perusahaan 12

California Ustruik Negara, UNCITRAL. Award, 4 May 1999
Energy

Hulley Hulley Enterprises Limited v The Russaian Federation, PCA 13

Enterprises Case No. AA 226

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MEMORANDUM for RESPONDENT [INDEX OF AUTHORITIES]

lslamic Oil Platforms (Islamic Republic of Iran v United States of 11

Republic of America), Judgement, I.C.J. Reports 2003, p. 161
Iran

Opus Opus Consulting Group Ltd v Ardenton Capital Corporation, 17

Consulting 2019 CanLII 1847 BCSC
Group

Robertson Robertson Quay Investment Pvt. Ltd. 23

v Steen Consultants Pvt. Ltd. and Anr., [2008] 2 SLR 623

St. Lawrence St. Lawrence Testing & Inspection Co. Ltd. v Lanark Leeds 17
Distribution Ltd., 2019 CanLII 69697

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MEMORANDUM for RESPONDENT [STATEMENT OF JURISDICTION]

STATEMENT OF JURISDICTION

National Police Procurement Corporation (NPPC), the Respondent in the present case, has the
honour to submit the present dispute before this Tribunal pursuant to its obligations under
Clause 15 of the Contract entered into by the Parties which is to be conducted in accordance
with SIAC Rules 2016.

The seat of arbitration is London, England. However, the Respondent respectfully submits that
the Tribunal does not have the requisite jurisdiction to decide the dispute before it.

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MEMORANDUM for RESPONDENT [STATEMENT OF FACTS]

STATEMENT OF FACTS

The parties to this Arbitration are ABC GmBH (“CLAIMANT”) and National Police
Procurement Corporation or NPPC (“RESPONDENT”), which are collectively referred to as
“THE PARTIES”.

The Claimant is a company incorporated in Fitzerland. It is a manufacturer of technological

products and have an experience of supplying them to law enforcement agencies across Europe.

The Respondent is a Public Sector Undertaking, that procures goods and services for the
government of Filandria.

The Republic of Filandria suffered an economic downfall. The growing discontentment among
people, resulted in countrywide protests. Some protests turned violent, leading to widespread
destruction of the public property. The police found it impossible to identify the perpetrators.

Date Event

20th Sept The government ordered the Claimant to immediately start the process of
procuring the drones which shall be used to supplement the efforts of the police.

Sept Due to the urgency and strong credentials, the Respondent approached the
Claimant as they had the shortest turnaround time.

1st Oct Officials of the Respondent visited the Claimant’s facility on their invitation. They
entered into a contract for 2000 units of the TRC 2645. The Drone had facial
recognition technology and extremely advanced AI algorithm capable of
distinguishing violent act with peaceful protest and alert the authorities. It could
also be integrated with biometric information database of Filandria.

3rd Oct Initial advance payment of €20 mil. made via wire transfer and the receipt was
acknowledged by the Claimant.

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MEMORANDUM for RESPONDENT [STATEMENT OF FACTS]

5th Oct The first tranche of drones was personally delivered by the Claimant. They also
hosted a dinner reception for the Respondent and other government dignitaries at
the Fitzerland Consulate at Farare.

9th Oct The Respondent received a series of emails informing that the Claimant was in
the process of changing their banking arrangements and instructed the Respondent
to transfer the amount to ABC Sdn Bhd, a subsidiary of ABC GmBh. The
Respondent demanded a certificate by the local chamber of Commerce of Riberia,
to confirm the relationship between the Claimant and ABC Sdn Bhd.

10th Oct The second tranche of drones were dispatched. Email confirming the dispatch was
sent which also contained the reminder to pay for the first tranche till 17 th Oct.

12th Oct The certificate was received by the Claimant in a courier addressed to Ms.
Chakma. The bank details of ABC Sdn Bhd were also annexed.

17th Oct Payment for the first tranche was made and confirmation mail was sent.

18th Oct Payment for the second tranche was made and confirmation mail was sent.

Third tranche dispatched according to the contract i.e. on or before 21 st Oct.

21st Oct Claimant realised that despite the confirmation mails, the bank account did not
reflect credit. The Claimant asked for the payment details from the Respondent.

22nd Oct The Respondent sent the details. The Claimant realised that the funds were
transferred to a bank account in Riberia. The Claimant asked the Respondent to
get the transaction reversed. The Respondent followed the instructions but the
bank informed that the amount was not recoverable at that stage in any case.

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MEMORANDUM for RESPONDENT [STATEMENT OF FACTS]

Oct An internal inquiry revealed that emails received by the Respondent were spoofed
and the certificate was forged. The news of the Phishing attack was over the
headlines and the Government of Filandria started a detailed investigation.

22nd Oct A protest in New Riley, suddenly turned violent. However, the Drones
inexplicably malfunctioned and completely failed to identify the escalation. As a
result, no alert was sent to the police forces and it caused a large-scale damage.

Oct The Claimant sent their technical team for evaluation. It was revealed that high
PM 2.5 level was the reason that drones failed to function. The sensors could not
capture the image of required resolution to power the AI engine. The Claimant
informed it would take at least 6 months to make the drones capable of functioning
in such conditions. Historically, the level of PM 2.5 in New Riley is high every
year in the beginning of winter due to confluence of factors.

24th Oct The Supreme Court of Filandria passed a stay order on the usage of any facial
recognition technology, and all legal proceedings pertaining to its procurement.

Meanwhile, the investigation noted that there might be applicable rules of public
procurement and hinted corruption. Soon after, Ms. Chakma resigned.

Oct The Claimant demanded payment for all the three tranches but the Respondent
said that they were under no obligation to make any further payments.

30th Oct The Respondent cancelled all the remaining orders.

21st Nov The Claimant commenced Arbitration after failed negotiations.

XIII NLS-TRILEGAL INTERNATIONAL ARBITRATION MOOT, 2020 PAGE | XXII

MEMORANDUM for RESPONDENT [STATEMENT OF FACTS]

PHISHING ATTACK VIA EMAIL

3RD PARTY INTERVENTION CONTRACT FORMATION

Initial email conversation

Hackers sending
confirming the model of
suspicious
drones to be sold. (24-09-
phishing emails
2019)

Hackers gained Claimant and Respondent

access to enter into contract for sale of
[Link]@[Link] drones. (01-10-2019)

POINT OF CONVERGENCE

Email to withhold
payments. Sent by
hackers.

Reply received on same thread by spoofed email of

Dwight Schrute changing bank details. No CC to
Jenny Liu marked. (09-10-2019)

Wire transfers made by Respondent to spoofed

address. (17-10-2019 & 18-10-2019)

Claimant not able to track transactions

and matter became critical. (21-10-2019)

XIII NLS-TRILEGAL INTERNATIONAL ARBITRATION MOOT, 2020 PAGE | XXIII

MEMORANDUM for RESPONDENT [ISSUES RAISED]

ISSUES RAISED

ISSUE:1

WHETHER THE ARBITRAL PROCEEDINGS SHOULD BE STAYED PURSUANT TO THE SUPREME

COURT’S ORDER?

ISSUE:2

WHETHER PUBLIC DISCLOSURE OF THE PROCEEDINGS SHOULD BE ALLOWED?

ISSUE:3

WHETHER THE ISSUE OF VALIDITY OF CONTRACT IS NON-ARBITRABLE?

ISSUE:4

WHETHER NPPC IS IN BREACH OF ITS OBLIGATIONS UNDER CLAUSE 3(1)(B), 3(1)(C) AND
3(1)(D) OF THE AGREEMENT?

ISSUE:5

WHETHER ABC GMBH IS IN BREACH OF CLAUSE 1 OF THE AGREEMENT?

XIII NLS-TRILEGAL INTERNATIONAL ARBITRATION MOOT, 2020 PAGE | XXIV

MEMORANDUM for RESPONDENT [SUMMARY OF ARGUMENTS]

SUMMARY OF ARGUMENTS

PART ONE: COMPLIANCE WITH THE SC’s ORDER AND PUBLIC DISCLOSURE

1. The Respondent submits that the Hon’ble Supreme Court exercised its plenary powers to
put the proceedings in abeyance and hence was well within its jurisdiction to do so. The
Arbitral Tribunal should respect the order of the Hon’ble Supreme Court in light of the
principle of Judicial Comity which provides for the deference and respect to be
maintained between two legal systems. Further, the Arbitral tribunal is vested with the
duty to render an enforceable award and since the present dispute reserves the potential
to affect the in rem rights of the Citizens of Filandria, any proceedings till the question
over the constitutionality of alleged technology is not settled will prove to be vexatious
and oppressive.

2. The Respondent submits that the present dispute involves instances of corruption thereby
necessitates disclosure and falls within the exceptions of Rule 39 SIAC. Further, the
dispute has public interest implications which is considered one of the exceptions to the
duty of confidentiality and commercial sensitivity and hence outweighs both. Respondent
submits that in the interest of justice, disclosure is of paramount importance so as to do
the rightful assessment of the facts questioned before the Hon’ble Supreme Court in the
ongoing legal proceedings in the Filandria. Therefore, all the documents pertaining to the
present arbitration should be made public.

PART TWO: JURISDICTION AND ADMISSIBILITY

3. The Respondent submits that the issue of validity is contract is non-arbitrable and hence
manifestly outside the jurisdiction of the Tribunal because the contract has been procured
through bribing the officials of the Procurement agency by the Claimant and so is vitiated
by egregious fraud which shakes the very foundation of the contract. Issues involving
such serious allegation of fraud require immediate intervention by the court and are non-
arbitrable in Filandria, which is the governing law of the arbitration agreement and the
Contract. Further, internationally such issues of fraud, if not are directly considered
beyond the tribunal’s jurisdiction but still are considered inadmissible and hence not
arbitrated upon. Moreover, arbitrating over this dispute will violate the national and
international public policy as well as the internationally recognized principle of clean
hands. Furthermore, the legitimacy of the object of the Contract, which forms a pre-

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MEMORANDUM for RESPONDENT [SUMMARY OF ARGUMENTS]

requisite for ascertaining the validity of the Contract, is still unclear and the matter
pertaining to the validity of the contract at the present stage is non-arbitrable.

PART THREE: MERITS

4. The Respondent submits that it is not in breach of Clause 3(1)(b), (c) and (d). Firstly, all
the payments that were due were made within the stipulated time. Moreover, since time
was not of the essence of the payment and the liability of the Respondent was also limited
to the purchase price of the drones, no additional payment could be demanded from the
Respondents. Secondly, the third tranche was rejected due to the defect in the drones and
the contract was frustrated because the legal impediment in the form of stay order of
Supreme Court made it impossible for the Respondent to perform their part of the
obligation. The unreasonable time required by the Claimant to fix the defect further
defeated the object of the Contract. Lastly, the Respondent cannot be compelled to bear
the amount lost in the Phishing attack as Claimant was in the best position to prevent the
fraud. It was the negligence of the of the Claimant itself that resulted in the success of
the attack.

5. The Respondent, further, submits that the Claimant was in breach of Clause 1 of the
Contract. Firstly, the drones were not fit for the purpose for which they were purchased.
There was an implied condition as to the quality of goods. The Respondent also
communicated the purpose of purchase and relied on the skills and judgement of the
seller while opting for the product. The purpose was to use the drones to supplement the
efforts of police by alerting them as soon as the protest turned violent. However, the
drones malfunctioned and no alert was sent to the police. Lastly, this breach of Clause 1
of the Contract caused a large-scale damage. The damage was also in contemplation of
both the parties. Therefore, the Respondent is also entitled to claim the damages caused.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

ARGUMENTS ADVANCED

PART ONE: COMPLIANCE WITH THE SUPREME COURT’S ORDER AND

PUBLIC DISCLOSURE
I. THE ARBITRAL PROCEEDINGS SHOULD BE STAYED PURSUANT TO THE SUPREME
COURT’S ORDER

¶ [1]. ABC GmBH [hereinafter ‘the Claimant’] commenced arbitration1 on account of

termination2 of the Contract, for procurement of drones 3 with facial recognition technology,4
by NPPC [hereinafter ‘the Respondent’]. The Respondent, however, contends, that the
Supreme Court of Filandria on 24th October 20195 has passed an order staying the usage of
such technology and legal proceedings pertaining to its procurement, 6 until it finally determines
the matter.7 Thus, it is submitted that the arbitral proceedings should be stayed in pursuance to
the order because: firstly, the Supreme Court was well within its powers to stay the proceedings
[A]; secondly, the Tribunal should the proceedings in abeyance in accordance with the
principle of judicial comity [B]; thirdly, the Tribunal should not adjudicate this dispute since
it violates ‘Rights in rem’ [C]; and lastly, the Tribunal should render an enforceable award [D].
A. THE SUPREME COURT WAS WELL WITHIN ITS POWERS TO STAY THE PROCEEDINGS
¶ [2]. In International Commercial Arbitration, courts can exercise their general power to stay
foreign seated arbitrations, when the proceedings have the potential to be proved as vexatious 8,
oppressive9, unconscionable or an abuse of the process of the court.10 Further, for passing such
orders the Court need not be the natural forum for the dispute.11Additionally, when the relevant
provisions of the Arbitration and Conciliation Act 1996 [hereinafter ‘Arbitration Act’],12 are
read harmoniously with the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, 1958 [hereinafter ‘New York Convention’]13 and it can be inferred that the

1
Case Study, Statement of Facts, ¶ 29.
2
Case Study, Statement of Facts, ¶ 28.
3
Case Study, Statement of Facts, ¶ 8.
4
Case Study, Statement of Facts, ¶ 5.
5
Case Study, Statement of Facts, ¶ 26.
6
Id.
7
Id.
8
Claxton Engineering Services, ¶ 34.
9
Id.
10
Intermet FCZO, ¶ 20; Elektrim S.A., ¶ 43.
11
Sana Hussain Sabbagh, ¶¶ 107,109; South Carolina Insurance, ¶¶ 24,40.
12
ACA 1996.
13
NYC 1958.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

Court is not prohibited to use its general power to stay the foreign seated arbitration then the
Court is free to exercise the same whenever required. 14
¶ [3]. The Supreme Court of Filandria under Article 142 of the Constitution of Filandria
[hereinafter ‘Constitution’],15 has the power to pass any such order or decree as is necessary
for delivering complete justice 16 in any cause or matter pending before it. In Ssangyong17 and
Skipper Construction18, the Supreme Court invoked the said Article and used its wide powers
to render complete justice.
¶ [4]. In the present case, the Supreme Court of Filandria, using its plenary power, has passed
an extremely wide19 order putting stay on legal proceedings, including arbitral proceedings, 20
pertaining to the procurement,21 in order to determine the constitutionality of the object of the
contract and questions of significant Rights of the people. 22 Hence, dispute resolution between
parties, in a closed proceeding such as arbitration23 until questions over the constitutionality of
the object carrying significant public interest are not settled, would render the arbitration
proceedings vexatious, oppressive and unconscionable. Therefore, it is submitted that the
Supreme Court was well within its power to stay the proceedings.
B. THE TRIBUNAL SHOULD PUT THE PROCEEDING IN ABEYANCE IN ACCORDANCE WITH
THE PRINCIPLE OF JUDICIAL COMITY

¶ [5]. According to the established principle of Judicial Comity, 24 the courts of one state or
jurisdiction will give effect to the laws and judicial decisions of another out of deference and
respect.25 In Shashoua,26 the Supreme Court upheld the English Court’s ruling and applied it
as the binding precedent on the lower courts in furtherance of judicial comity. Further, in
Societe Generale, the arbitral tribunal stayed the arbitral proceedings in light of the principle
of comity. 27
¶ [6]. In the present case, the Supreme Court of Filandria passed an wide order staying usage
of any facial recognition technology, and all legal proceedings pertaining to its procurement

14
Weissfisch, ¶¶ 17,25; Albon, ¶ 8.
15
Art. 142, COI 1950.
16
Umadevi, ¶ 35.
17
Ssangyong Engineering, ¶ 49.
18
Skipper Construction, ¶ 4.
19
Case Study, Statement of Facts, ¶ 26.
20
General Officer, ¶ 12.
21
Case Study, Statement of Facts, ¶ 26.
22
Case Study, Statement of Facts, ¶ 26.
23
Tackaberry & Marriott, pp. 4-5.
24
Black’s Law Dictionary, p. 105.
25
World Sports Group, ¶ 20.
26
Shashoua, ¶ 38.
27
Societe Generale quoted in Schultz & Ridi, p. 589.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

till the matter is sub judice.28 Henceforth, the arbitral proceedings initiated by the Claimant
would be in manifest disregard to judicial comity between the two legal systems if not put in
abeyance. Therefore, it is submitted that the arbitral proceedings should be stayed in pursuance
to the order delivered by the Supreme Court of Filandria.
C. THE TRIBUNAL SHOULD NOT ADJUDICATE THIS DISPUTE SINCE IT VIOLATES ‘RIGHTS IN
REM’

¶ [7]. The Respondent submits that the present dispute violates ‘Rights in rem’ of the citizens
of Filandria and therefore should not be arbitrated because: firstly, the law governing the
arbitration will be Filandrian Law (1); and secondly, the disputes affecting in rem Rights are
non-arbitrable under Filandrian Law (2).
1. THE LAW GOVERNING THE ARBITRATION AGREEMENT WILL BE FILANDRIAN LAW
¶ [8]. In Sulamérica,29 the English Court of Appeal opined that the law governing the
substantive contract applies to the respective arbitration agreement, unless indicated otherwise.
The Court established a presumption that the parties which had not expressly chosen the law
governing the arbitration agreement intended the whole of their relationship to be governed by
the same system of law 30and this principle has been approved internationally by courts and
arbitral tribunals. 31
¶ [9]. In the present case as the Claimant and the Respondent collectively chose Laws of
Filandria to govern the entire agreement,32 they thus intended to apply the same law to the
Arbitration Clause. Hence, it is submitted that the law governing the substantive Contract
governs the Arbitration Clause as well.
2. DISPUTES AFFECTING IN REM RIGHTS ARE NON-ARBITRABLE UNDER FILANDRIAN LAW
¶ [10]. In Booz Allen,33 the Supreme Court upheld the exception of public policy in arbitration
and propounded the test of ‘in rem and in personem. The court in its assessment noted that
Rights against a particular person (in personem) are arbitrable however those against the world
at large (in rem) are not.34
¶ [11]. In the present case, the Respondent had entered into the contract with the Claimant for
the purchase of TRC 264535 drones which were inbuilt with AI and were designed to use facial

28
Case Study, Statement of Facts, ¶ 26.
29
Sulamérica, ¶ 61.
30
Id.
31
BCY, ¶ 4; Habas Sinai, ¶ 101; ICC 9987, ¶ 32; Kronke & Nacimiento, p. 224.
32
Case Study, Annx 1, Clause 16.
33
Booz Allen, ¶ 23.
34
Rab, p. 163.
35
Case Study, Statement of Facts, ¶ 8.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

recognition software to trace the identity of persons by capturing their images. 36 Thus, it can
be reasonably inferred that the object 37 of entering into the contract was the use of this
technology. 38 The Supreme Court of Filandria is determining whether the aforesaid object of
the disputed contract violates the Rights of the citizens at large. If the Supreme Court of
Filandria answers this question in the affirmative, then that would categorise the dispute as
non-arbitrable since it would directly affect Rights in rem.
¶ [12]. Moreover, the spoofed e-mails received by the Respondent due to the Claimant being
subjected to the phishing attack39also compromised the Respondent’s server by giving direct
access to the hackers.40 This invariably exposed the Respondent’s server to a similar phishing
attack having far-reaching consequences since the server contained sensitive information of the
citizens of Filandria.41 The consequent outcome of such a phishing attack could have led to a
situation where the biometric data of the Filandrian citizens would have been under threat and
thus would infringe their privacy. 42
¶ [13]. Hence, it is submitted that the intervention of the Hon’ble Supreme Court is of
paramount importance and until questions over the constitutionality of usage of such
technology and the magnitude of the phishing attack on the Respondent’s server are not
examined. Therefore, the arbitral proceedings should be put in abeyance as the dispute reserves
the potential to affect Rights in rem.
D. THE TRIBUNAL SHOULD RENDER AN ENFORCEABLE AWARD
¶ [14]. The foremost object of arbitration is to render an enforceable award 43 which makes
‘enforceability’ the raison d'etre of the arbitral process. 44According to Singapore International
Arbitration Centre [hereinafter ‘SIAC’] Rule 41.2,45an arbitral tribunal is vested with a duty to
render an enforceable award. This obligation is considered to be of quintessential nature 46 and
if the tribunal renders an unenforceable award then it would be in derogation of the duty it has
been vested with.47

36
Case Study, Statement of Facts, ¶ 7.
37
Pollock & Mulla, p. 144; Cheshire, p. 640.
38
Case Study, Statement of Facts, ¶ 5.
39
Case Study, Statement of Facts, ¶ 20.
40
Case Study, Statement of Facts, ¶ 21.
41
Case Study, Statement of Facts, ¶¶ 13, 23, 26.
42
Puttaswamy, ¶ 18.
43
Berg, p. 114.
44
Derains & Schwartz, p. 385.
45
Rule 41.2, SIAC 2016.
46
Waincymer, p. 97.
47
Id.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

¶ [15]. Further, a tribunal should not render an award which goes against the national and
international public policy48and if it does so that will render the award unenforceable. 49 The
principle of ‘Ex abundante cautela’, mandates that if the parties draw the tribunal's attention
to a specific jurisdiction as a likely place of enforcement, the tribunal should consider the law
and public policy of that place as well. 50
¶ [16]. In the present case, the constitutionality of the facial recognition technology software
is yet to be determined by the Supreme Court.51 The Respondent has drawn the Tribunal’s
attention to Filandria being the likely place for enforcement, since the Respondent is a Public
Sector Undertaking [hereinafter ‘PSU’] 52
of Filandria and moreover, the cause of action has
arisen in Filandria.
¶ [17]. Thus, the position of law with regard to the very object of the contract is unsettled in
the State of Filandria53 and as a corollary, if the proceedings are not put in abeyance then the
Tribunal will render an award that would be unenforceable as being rendered in a legal
proceeding stayed by the Supreme Court. Therefore, it is submitted that the tribunal should
stay the proceedings and thus not contravene the fundamental principle of rendering an
enforceable award.
¶ [18]. CONCLUSION TO THE FIRST ISSUE: In conclusion, it is submitted that this Tribunal
should give due regard to the order of the Hon’ble Supreme Court and the recognised principle
of judicial comity. Further, as the proceedings may culminate into an arbitral award which has
the potential to affect Rights in rem and thus this Tribunal should not render a potentially
unenforceable award. Therefore, the Arbitral proceedings should be stayed pursuant to the
Supreme Court’s order.
II. PUBLIC DISCLOSURE SHOULD BE ALLOWED

¶ [19]. The Claimant objects to the public disclosure of all the submissions, pleadings, hearings
and evidence [hereinafter ‘documents’],54 citing violation of Rule 39 of SIAC55 and the
commercial sensitive nature of these documents. 56 However, the Respondent submits that
public disclosure should be allowed because: firstly, public disclosure of documents does

48
Art. V(2)(b), NYC 1958; Art. 41, ICC 2017.
49
Id.
50
Redfern & Hunter, p. 365.
51
Case Study, Statement of Facts, ¶ 26.
52
Case Study, Statement of Facts, ¶ 5.
53
Case Study, Statement of Facts, ¶ 26.
54
Case Study, Annx 2.
55
Rule 39, SIAC 2016.
56
Case Study, Annx 2.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

violate Rule 39 SIAC [A]; secondly, public disclosure of documents shall further the ongoing
court proceedings in Filandria [B]; thirdly, public Interest Implications precede the duty of
confidentiality [C]; and lastly, the defense of commercially sensitive information cannot be
granted to the Claimant [D].
A. PUBLIC DISCLOSURE OF DOCUMENTS DOES NOT VIOLATE RULE 39 SIAC
¶ [20]. Rule 39 of SIAC, 57 enshrines an obligation of confidentiality upon the parties and the
arbitrators to the dispute. However, the underlined rule, 58 is subject to exceptions mentioned
under Rule 39.2 SIAC.59 One of the exceptions under Rule 39 of SIAC, 60 provides that the
parties or the arbitrators may disclose matters relating to arbitration “in compliance with the
provision of the laws of any state which are binding on the party making
disclosure”.61Additionally, when a duty of disclosure is cast upon the tribunal members by
virtue of a national legislation,62 such a duty would override any express or implied obligation
of confidentiality. 63
¶ [21]. Further, as stipulated under General Financial Rules, 2017 [hereinafter ‘GFR’], every
authority delegated with the financial power of procuring goods in public interest shall have
the responsibility and accountability to bring efficiency, transparency and
economy. 64Additionally, Section 4(1) of the Whistle-blowers Act, 2011,65 when read
harmoniously with Section 3(b)(v)(C) of the Prevention of Corruption Act 1988, 66 requires the
arbitrators and the parties not to bar the public disclosure of documents in cases where
significant public interest is involved.
¶ [22]. In the present case, the Respondent submits that as significant public interest is involved
in transactions which involve dealing with public goods such as drones, the authorities which
engage in the same are publicly accountable for the dissemination of all such information
pertaining to the transaction. Therefore, it is submitted that the public disclosure of the
document should be allowed the present situation is covered within the exception as stated
under Rule 39 SIAC.67

57
Rule 39.1, SIAC 2016.
58
Id.
59
Rule 39.2, SIAC 2016.
60
Rule 39.2.d, SIAC 2016.
61
Id.
62
Cremades & Caims quoted in Karsten and Berkeley, pp. 68-70,77.
63
ILAIAC Report, ¶ 11; Hwang & Chung, p. 622.
64
Rule 144, GFR 2017.
65
Art. 4(1), WBPA 2014.
66
Art. 3(b)(v)(C), PCA 1988.
67
Rule 39.2.d, SIAC 2016.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

B. PUBLIC DISCLOSURE OF DOCUMENTS SHALL FURTHER THE ONGOING COURT

PROCEEDINGS IN FILANDRIA

¶ [23]. Even in cases where there is no statutory compulsion on an arbitrator to disclose corrupt
activities, disclosure on his or her own accord to the relevant authorities may be done in the
interests of justice or in light of the larger public interest, both of which outweigh to the duty
of confidentiality. 68 Moreover, according to the principle of “ in the interests of justice”69, any
judicial decision should be based on an accurate assessment of all the evidences relevant to the
matter. Furthermore, to ensure that such an accurate assessment is undertaken by the Court the
duty to maintain confidentiality between the parties can be done away with. 70
¶ [24]. In the present case, the court proceedings were initiated in the State of Filandria 71 and
for the purpose of an accurate assessment, the duty of confidentiality shall be outweighed by
the exception of “in the interests of justice” and to materialize the larger public interest
involved. Therefore, it is submitted that all the documents provided as part of the present
arbitration should be made public in light of the ongoing Court proceedings in Filandria.
C. PUBLIC INTEREST IMPLICATIONS PRECEDE THE DUTY OF CONFIDENTIALITY
¶ [25]. The duty of confidentiality is not absolute and is subject to the exception of public
interest.72 In the Chartered Institute of Arbitrators Case73, the English Commercial Court held
that where significant public interest is involved, public disclosure becomes necessary. 74The
judgment directs that arbitration is to be characterized not merely as a private and consensual
dispute resolution mechanism, but as part of a civil justice system which the public has an
interest in protecting.75
¶ [26]. Courts and tribunals, 76 have considered that even if the institutional rules provides for
a duty of confidentiality, public interest implications shall always take precedence and thus
should always be fostered.77 In Esso78 and the Cockyatoo Dockyard79, the Court reiterated this
principle and opined that the exception of public interest shall prevail as against the duty of
confidentiality.

68
Id.
69
Ali Shipping Corp. quoted in Chartered Institute of Arbitrators, ¶ 44.
70
City of Moscow, ¶ 38.
71
Case Study, Statement of Facts, ¶ 26.
72
Hiber & Pavic, p. 464; Hwang & Chung, p. 612.
73
Chartered Institute of Arbitrators, ¶ 41.
74
Id.
75
Id.
76
Panhandle Eastern quoted in Lovinfosse, p. 22.
77
Sauvant, p. 775.
78
Esso quoted in Weixia, p. 8.
79
Dockyard quoted in Weixia, p. 16.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

¶ [27]. In the present case, the very fact that a state enterprise had been subjected to a phishing
attack80 raises a question of substantial public interest. Further, the technology in question
reserves the potential to infringe the Right to Privacy of the citizens81 and the fact that the
investigation conducted by State hints towards instances of corruption 82 raises questions of
significant public interest.
¶ [28]. All the above-mentioned factors combinedly constitute ‘significant public interest’ that
mandate a reconsideration of the duty of confidentiality. Thus, the duty of confidentiality in
the present dispute should not be maintained due to the far-reaching public interest concerns.
¶ [29]. Therefore, it is submitted that all the documents relevant to the arbitral proceedings
should be made public.
D. THE DEFENSE OF COMMERCIALLY SENSITIVE INFORMATION CANNOT BE GRANTED TO
THE CLAIMANT

¶ [30]. In International Commercial Arbitration, the duty to maintain confidentiality extends

to three categories: firstly, documents that are inherently confidential including the proprietary
information; secondly, documents which can be disclosed by the parties and would have the
same level of protection as is available to similar documents in litigation 83and lastly, the arbitral
award. Nonetheless, if the dispute has public interest implications then the defence of
commercial sensitivity shall not prevail. 84
¶ [31]. In Esso, the Supreme Court held that despite the commercially sensitive nature of the
information the same has to be made public if significant public interest involved. 85 Further,
in Francome, 86
the Court provided the basis for this exception and stated, “whilst there is a
public interest in maintaining confidence, there is also a countervailing public interest in
exposing conduct which involves a breach of the law or which is anti-social.”87
¶ [32]. In the present case, the Respondent submits that there was no manifestation of
requesting the inherently commercially sensitive information rather the request made was
confined to the submissions, pleadings, hearings and evidences provided as part of the present
arbitration88 and thereby falls under the second category. 89 Regardless, even if the present

80
Case Study, Statement of Facts, ¶ 21.
81
Case Study, Statement of Facts, ¶ 26.
82
Case Study, Statement of Facts, ¶ 27.
83
Riddick, quoted in Ang Yee, ¶ 20.
84
Esso quoted in Weixia, p. 8.
85
Id.
86
Francome, p. 411.
87
Id.
88
Case Study, Annx 2, ¶ 4.
89
Riddick, quoted in Ang Yee, ¶ 20.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

dispute involves commercially sensitive information, public interest exception shall outweigh
the same.
¶ [33]. Additionally, there also exists a countervailing public interest,90 that mandates the
public disclosure of the documents. Instances of corruption in the instant matter qualify as 91
anti-social92 and are also against the law.93 Therefore it is submitted that under any
circumstance, the Respondent is not barred from the Public Disclosure of the documents.
¶ [34]. CONCLUSION TO THE SECOND ISSUE: In conclusion, it is submitted that the present
dispute involves significant public interests which outweighs the duty of confidentiality. Also,
the ongoing court proceedings mandate such disclosure. Further, the Respondent did not breach
either Rule 39 SIAC or the obligation attached with the commercially sensitive information.
Therefore, the Respondent should be barred with the public disclosure of all the pleadings,
submissions and evidences pertaining to the present arbitration.
PART TWO: JURISDICTION AND ADMISSIBILITY
III. THE ISSUE OF VALIDITY OF CONTRACT IS NON-ARBITRABLE

¶ [35]. The Claimant has initiated arbitral proceedings against the Respondent on the grounds
of Clause 15 of the Contract.94 However, the Respondent has challenged the validity of the
Contract95 and the jurisdiction of the Tribunal to determine its validity. Thus, it is submitted
that the validity of contract is non-arbitrable because: firstly, the Tribunal does not have
jurisdiction to arbitrate over the validity of the Contract [A]; secondly, if the Tribunal is of the
opinion that it has jurisdiction, even then the claims are inadmissible and hence not
arbitrable[B]; thirdly, arbitrating over this dispute will violate principles of public policy [C];
fourthly, arbitrating over this dispute will be against the doctrine of clean hands [D]; and lastly,
the unsettled position of the object of the Contract in question prevents the Tribunal from
arbitrating over the validity of the Contract [E].
A. THE TRIBUNAL DOES NOT HAVE JURISDICTION TO ARBITRATE OVER THE VALIDITY OF
THE CONTRACT

¶ [36]. Irregularity, corruption and fraud which shakes the foundation of a transaction, makes
for a fraud of egregious nature.96 In Ayyasamy, the Supreme Court held that contracts vitiated

90
Francome, p. 411.
91
Case Study, Statement of Facts, ¶ 27.
92
Raj Kumar, p. 568.
93
Ch 3, PCA 1988.
94
Case Study, Annx 1, Clause 15.
95
Clarifications, q. 18.
96
Gujarat Maritime, ¶ 11.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

by egregious or serious allegations of fraud97 are non-arbitrable98 and beyond the jurisdiction
of arbitral tribunals. 99 Additionally, non-compliance with the tender requirement by the
government organisations shudders the public confidence, affects transparency, equality and
healthy competition.100 Such non-compliance allows space for irregularities, interference and
corrupt practices by the authorities which disrupts the very foundation of the contract. 101
¶ [37]. The Public Procurement Act of Filandria 102 [hereinafter ‘the Procurement Act’] and the
GFR 2017103 mandates that no government agency shall procure goods except by inviting
tenders for supply. The Procurement Act 104 and the GFR105 provide exceptions to this general
rule in four situations: firstly, in cases of natural disaster or emergency; 106 secondly, when
goods are available from a single source;107 thirdly, when the cost of goods does not exceed
€50,000;108and fourthly when goods are procured for standardization and compatibility with
existing goods.109 The exceptional circumstances with respect to the emergency can only be
used when an emergency has been declared by the government.110
¶ [38]. In the present case, there was no declaration of emergency by the government or any
situation of natural disaster existed. 111 Further, the goods, were not being procured for
compatibility with existing goods, were available from more than one sources112 and costed
much more than € 50,000.113Therefore, the Contract for procurement of goods was not in
compliance with the Procurement Act.
¶ [39]. Further, entering into the contract during a visit which was only for the purpose of
exploration,114 unprecedented dinner parties between the Claimant and the officials of NPPC115
during the times of crisis in the country116 and resignation by the Chief Financial Officer of

97
Ayyasamy, ¶ 14; Radhakrishnani, ¶ 21.
98
Ayyasamy, ¶ 21; Rrb Energy, ¶ 55.
99
Himadri Chemicals, ¶ 14.
100
Global Rescue, ¶ 24.
101
Ram & Shyam Co., ¶ 14.
102
Case Study, Annx 6, Clause 6.
103
Rule 158, GFR 2017.
104
Case Study, Annx 6, Clause 7.
105
Rule 166, GFR 2017.
106
Case Study, Annx 6, Clause 7 (a).
107
Case Study, Annx 6, Clause 7 (b).
108
Case Study, Annx 6, Clause 7 (c).
109
Case Study, Annx 6, Clause 7 (d).
110
Global Rescue, ¶ 24; Al Faheem, ¶ 15.
111
Case Study, Statement of Facts, ¶¶ 4,5.
112
Case Study, Statement of Facts, ¶ 6.
113
Case Study, Statement of Facts, ¶ 11.
114
Case Study, Statement of Facts, ¶ 8.
115
Case Study, Statement of Facts, ¶ 12.
116
Case Study, Statement of Facts, ¶¶ 3,4.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

NPPC just after the investigation hinted at issues of corruption,117 indicates that the very
foundation of the Contract for procurement of drones was vitiated by egregious or serious
allegations of fraud. Since the law governing the arbitration agreement is the law of Filandria 118
and as the dispute involves such grave allegations of fraud, thus it is non-arbitrable. Therefore,
it is submitted that the Tribunal does not have jurisdiction to arbitrate over the validity of the
Contract.
B. IF THE TRIBUNAL IS OF THE OPINION THAT IT HAS JURISDICTION, EVEN THEN THE
CLAIMS ARE INADMISSIBLE AND HENCE NOT ARBITRABLE
¶ [40]. Admissibility of a claim is an alternative to jurisdiction and it concerns the question
whether in light of all the circumstances, a tribunal ought to examine a claim. 119 The
International Court of Justice applied the principle of mutatis mutandis in international
arbitration and stated that objections to admissibility construe that even if the court has
jurisdiction,120 nonetheless there are reasons why the Court should not proceed to an
examination of merits.121
¶ [41]. International tribunals recognize the principle of nemo auditor propriam turpitudinem
allegans122i.e. no one can be heard who invokes his own guilt. The tribunals have held that
claims with respect to contracts procured by bribery or corruption are void123 or voidable124 at
the instance of the innocent party. Thereupon, when such claims are brought before the tribunal
they shall be rendered inadmissible 125 and be dismissed. 126
¶ [42]. In the present case, the Claimant has procured the Contract by bribery of the officials,127
thereby leading to Contract being void, or voidable at the instance of the Respondent. The
Respondent, being the victim of the fraud, is thus an innocent party and since it pleads before
this Tribunal for dismissing the claims of the Claimant, the Contract should ought to be
declared void by the Tribunal. Therefore, it is submitted that if the Tribunal decides that it has
jurisdiction over the dispute, it does not mean that it shall exercise it since these claims are
inadmissible and hence not arbitrable.

117
Case Study, Statement of Facts, ¶ 27.
118
Refer ¶¶ [8]-[9], Memorandum for Respondent.
119
Baizeau & Kreindler, p. 19.
120
lslamic Republic of Iran, ¶ 29.
121
Baizeau & Kreindler, p. 19.
122
Gaillard & Savage, p. 280; Goldman, p. 272; Böckstiegel, pp. 201-202.
123
ICC 3916 quoted in Jarvin & Derains, p. 507; ICC 3913 quoted in Jarvin & Derains, p. 497; ICC 2730 quoted
in JDI, pp. 914-920; ICC 5943 quoted in JDI, p. 1014.
124
Panama & South Pacific quoted in Tigris, ¶ 142; Armagas, ¶ 9; LogicRose quoted in Tigris, ¶ 142.
125
Sayed, p. 261; World Duty Free, ¶ 183.
126
Crescent Petroleum Company, ¶ 43; Honeywell, ¶ 178; Born, p. 2183.
127
Case Study, Statement of Facts, ¶ 27.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

C. ARBITRATING OVER THIS DISPUTE WILL VIOLATE PRINCIPLES OF PUBLIC POLICY

¶ [43]. Public policy includes the most basic norms of morality and justice 128 of a State. The
violation of public policy is injurious to public good and is wholly offensive to the ordinary
reasonable members of the public. 129 In international commercial arbitrations, corruption is
viewed as something that violates the international public policy. 130
¶ [44]. Fraus omnia corrumpit i.e. fraud invalidates all131 and thereby, tribunals oppose any
attempt to use the arbitral process to give effect to contracts contaminated by corruption 132 as
arbitral process should not be abused to further corrupt ends. 133 In order to protect the general
interest and public policy, the international commercial arbitral tribunals when dealing with
contracts which are tainted by corruption, render them unenforceable. 134 Additionally, under
Filandrian law, which is the governing law of both the arbitration agreement and the Contract,
focus is on ensuring democratic values of transparency, justice and equality 135 thus all contracts
involving corruption are considered to be violating public policy and fall under the category of
non-arbitrable disputes.136
¶ [45]. In the present case, the investigation initiated by the government of Filandria, 137 the
conduct of the key officials of the NPPC, 138 unprecedented social gatherings between the
parties, 139and a significant entity of Filandria being subject to a phishing attack140indicates that
the contract is tainted by fraud, corruption and bribery. Therefore, it is submitted that arbitrating
over this dispute will violate the international as well as the public policy of Filandria.
D. ARBITRATING OVER THIS DISPUTE WILL BE AGAINST THE DOCTRINE OF CLEAN HANDS
¶ [46]. It is a widely recognised principle that ‘he who comes into equity must come with clean
hands’ i.e. a court of equity refuses relief to a plaintiff whose conduct in regard to the subject-
matter of dispute has been improper.141 In international arbitration, doctrine of clean hands acts

128
Parsons & Whittemore, ¶ 9; Loucks, ¶ 11.
129
Deutsche Schachtba-und, ¶ 25; Richardson quoted in WLR, p. 1035.
130
Sanders, p. 258; Gaillard & Pietro, p. 787.
131
Fellmeth & Harwitz, p. 112.
132
Himpurna California Energy, ¶ 118; Nayyar, ¶ 92.
133
ICC 2730 quoted in JDI, pp. 914-920; ICC 3913 quoted in Jarvin & Derains, p. 497; ICC 3916 quoted in Jarvin
& Derains, p. 507.
134
Gaillard & Savage, p. 798.
135
Case Study, Statement of Facts, ¶ 2.
136
Ayyasamy, ¶ 21; Malhotra quoted in Ayyasamy, ¶ 14.
137
Case Study, Statement of Facts, ¶ 21.
138
Case Study, Statement of Facts, ¶¶ 8, 27.
139
Case Study, Statement of Facts, ¶ 12.
140
Case Study, Statement of Facts, ¶ 21.
141
Halsbury's, pp. 874-876.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

as a jurisdictional bar 142 since the tribunals do not grant assistance to a party that has engaged
in a corrupt conduct.143 The doctrine is applicable in commercial arbitration when laws
applicable to the contract recognize this doctrine. 144 In both India and England, the laws
applicable to the Contract, the doctrine of cleans hands is a recognized principle. 145
¶ [47]. In the present case, the Claimant has committed a globally condemned offence of
bribery and corruption146 and subsequently, has approached the Tribunal with ‘unclean hands’.
Therefore, it is submitted that the Tribunal should not address the claims of the Claimant and
if it does so, it would be in derogation of the principle of clean hands.
E. THE UNSETTLED POSITION OF THE OBJECT OF THE CONTRACT IN QUESTION PREVENTS
THE TRIBUNAL FROM ARBITRATING OVER THE VALIDITY OF THE CONTRACT

¶ [48]. The governing law of the Contract is the Filandrian law and contracts, the object of
which is unlawful or opposed to public policy are void and hence unenforceable under the
Filandrian law. 147 The object of the contract refers to the purpose148 or design149 for which the
contract was entered into.150 It is a settled principle of international arbitration that any claims
based on void contracts shall be dismissed.151
¶ [49]. In the present case, the object of the Contract or the purpose for which the contract was
entered into was the procurement and usage of such technology152 which can recognize the
facial attributes of a person153 and collate154 it with biometric data of citizens.155 However, the
usage of such technology has been challenged by the citizens of Filandria, 156 as being violative
of their Right to Privacy and the Supreme Court is yet to decide on its legitimacy. 157
¶ [50]. For the Tribunal to decide whether it can arbitrate over the validity of the present
Contract it shall first ensure that the contract is not void. Therefore, it is submitted that since,
the legal position with respect to the object of the Contract, which has a direct impact on the

142
World Duty Free, ¶ 157.
143
Gustav, ¶ 123; Hulley Enterprises, ¶¶ 1351-1352.
144
ICC 6474 quoted in Berg, p. 278; JIA, p. 6.
145
Arunima, ¶ 11; London, ¶ 222; Blackmore, ¶ 52.
146
Case Study, Statement of Facts, ¶ 27.
147
§ 23, ICA 1872.
148
Jaffer, ¶ 2.
149
Pollock & Mulla, p. 144.
150
§ 23, ICA 1872.
151
Bribery & Arbitrator’s Task, ¶ 10; World Duty Free, ¶ 164; Swiss Timing, ¶ 28.
152
Case Study, Statement of Facts, ¶¶ 5, 7.
153
Case Study, Statement of Facts, ¶ 7.
154
Case Study, Statement of Facts, ¶ 7.
155
Case Study, Statement of Facts, ¶ 5.
156
Case Study, Statement of Facts, ¶ 26.
157
Case Study, Statement of Facts, ¶ 26.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

voidability of the contract, is unclear, thus it prevents the Tribunal from arbitrating over the
validity of the Contract.
¶ [51]. CONCLUSION TO THE THIRD ISSUE: In conclusion, it is submitted, that since fraud and
justice never dwell together, thus the validity of the disputed contract is non-arbitrable.
Additionally, the Tribunal is not competent to adjudicate since the legal position over the object
of contract is unsettled. Moreover, the claims are inadmissible and arbitrating over it will
violate principles of clean hands and public policy. Therefore, the issue is manifestly outside
the tribunal’s jurisdiction.
PART THREE: MERITS
IV. NPPC IS NOT IN BREACH OF ITS OBLIGATIONS UNDER CLAUSE 3(1)(B), 3(1)(C) AND
3(1)(D)

¶ [52]. The Claimant professes that the Respondent breached Clause 3 of the Contract. Though
the due amount was paid, the Claimant still demands the payment of the first three tranches. 158
The Claimant aims to extract the amount that it lost to a Phishing attack from the Respondent.
However, the Respondent submits that it is not bound to make any further payments because:
firstly, all due payments were made to the Claimant in the stipulated time [A]; secondly, the
third tranche of drones was rejected by the Respondent and the Contract was frustrated [B];
lastly, the Respondent is not liable to pay the amount lost in the Phishing attack [C].
A. ALL DUE PAYMENTS WERE MADE TO THE CLAIMANT IN THE STIPULATED TIME
¶ [53]. According to the Contract, 500 units were to be dispatched by the Claimant on or before
5th October 2019.159 The Respondent had to pay within 12 days from the date of receipt of
confirmation of dispatch.160 Since the first tranche was delivered personally161, no such
confirmation was received and the payment shall be made within 12 days from the delivery
made on 5th October162 according to Clause 3(1)(b).
¶ [54]. Moreover, the Claimant itself specified that payment for the first tranche was due on
17th October 2019 in the mail for the dispatch of second assignment 163. Subsequently, the wire
transfer was made on the due date i.e. 17th October 2019. The payment confirmation was also
sent on the same day to the Claimant, 164 in accordance with Clause 3(1)(b).

158
Case Study, Statement of Facts, ¶ 28.
159
Case Study, Annx 1, Clause 2(1)(a).
160
Case Study, Annx 1, Clause 3(1)(b).
161
Case Study, Statement of Facts, ¶ 12.
162
Case Study, Statement of Facts, ¶ 23.
163
Case Study, Annx 3 (10th Oct, Dwight Schrute to Lakshmi Chakma @ 5:15:10 pm).
164
Case Study, Annx 3 (17th Oct, Lakshmi Chakma to Dwight Schrute @ 5:15:20 pm).

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¶ [55]. Further, the Respondent did not breach Clause 3(1)(c) of the Contract, whose terms of
payment were same as that of Clause 3(1)(b), as the confirmation mail for dispatch of the
second tranche was received on 10th October 2019165 and the payment was made well before
the due date on 18th October 2019.166
¶ [56]. In arguendo, even if the payment is not made within the stipulated time the Sale of
Goods Act, 1930 [hereinafter ‘SOGA’] provides that the stipulations as to time of payment are
not deemed to be of the essence of a contract of sale, unless the contrary appears from the terms
of the Contract.167 Mere mention of the specified date of completion of the contract or insertion
of a default clause specifying penalty does not itself constitute evidence of the intention of the
parties to make it of the essence. 168 The intention of the parties to contract must appear from
the terms of the contract as it was entered into and the subsequent conduct of the parties is not
relevant.169
¶ [57]. The use of the words “this clause” in Clause 2 of the agreement 170 suggests that time
of performance is of the essence only for the delivery in Clause 2. No such condition is laid
down in Clause 3. Additionally, the total liability of the Respondent is limited to the purchase
price of the drones dispatched.171 Therefore, the Claimant is not entitled to compensation for
delayed payments on the ground of time taken for the wire transfer to be completed.
B. THE THIRD TRANCHE OF DRONES WAS REJECTED BY THE RESPONDENT AND THE
CONTRACT WAS FRUSTRATED
¶ [58]. A sale is not completed unless the purchaser accepts the goods without any reservation,
only then he is bound by the contract of sale. 172The Respondent had not communicated
acceptance of the third tranche according to the provisions 173 of the SOGA. Thus, it is
submitted that the Respondent has not breached Clause 3(1)(d) of the agreement because:
firstly, the Respondent rejected to the drones due to their defect (1); and secondly, the Contract
was frustrated because the object of the Contract was defeated (2).
1. THE RESPONDENT REJECTED THE DRONES DUE TO THEIR DEFECT

165
Case Study, Annx 3 (10th Oct, Dwight Schrute to Lakshmi Chakma @5:15:10 pm).
166
Case Study, Statement of Facts, ¶ 17.
167
§11, SOGA 1930.
168
Pakhar Singh, ¶ 6;Manglaram, ¶ 8.
169
Hindustan Construction, ¶ 15.
170
Case Study, Annx 1, Clause 2.
171
Case Study, Annx 1, Clause 3(2).
172
Minerals, ¶ 13.
173
§ 42, SOGA 1930.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

¶ [59]. When the goods are sent by the seller to the buyer in performance of the contract, it
does not preclude the buyer from objecting to them, by virtue of receiving them. Receipt and
delivery are two entirely different things and the receipt would become acceptance if the right
of rejection is not exercised within reasonable time.174
¶ [60]. The Respondent informed the Claimant about the malfunctioning of the drones,175
within reasonable time by refusing to accept the delivery. 176 It was also acknowledged by the
Claimant as they sent their team to evaluate the units. 177 Hence, it is submitted that the
Respondent had rejected the drones and so is not bound to make the payment.
2. THE CONTRACT WAS FRUSTRATED BECAUSE THE OBJECT OF THE CONTRACT WAS DEFEATED
¶ [61]. The Supreme Court of Filandria passed a stay order on the usage of facial recognition
technology, and all legal proceedings pertaining to its procurement. 178 Clause 10 of the
Contract provides for exemption in case of force majeure. It is also envisaged in the provisions
of The Indian Contract Act, 1872 [hereinafter ‘ICA’].179
¶ [62]. Moreover, the use of words “such events include but are not limited to”180 in the Clause
indicate that the list is inclusive and not exhaustive. The Tribunal should consider that the
intention of the clause is to save the performing party from the consequences of anything over
which it has no control. 181
¶ [63]. The stay order is a legal impediment outside the control of the parties. It made the
performance impossible for the Respondent. The word ‘impossible’ does not mean literal
impossibility. The performance of the act may not be physically impossible but it may be
impracticable from the point of view of the object which the parties had in the view and if any
change in circumstance totally upsets the basis on which the parties rested their bargain, it can
be said that the promisor found it impossible to do the act which he promised to do.182
¶ [64]. In the present case, the purpose was to identify the perpetrators by using facial
recognition technology integrated with the biometric data.183 A stay of this nature makes the
act of buying the drones illegal. This prevents the Respondent from using it for the object that
they had in mind, which shakes the very foundation of the Contract.

174
Blanche, ¶ 16.
175
Case Study, Statement of Facts, ¶ 24.
176
Clarifications, q. 45.
177
Id.
178
Case Study, Statement of Facts, ¶ 26.
179
§ 56, ICA 1872.
180
Case Study, Annx 1, Clause 10(1).
181
Dhanrajamal, ¶ 19.
182
Satyabrata Ghose, ¶ 9.
183
Case Study, Statement of Facts, ¶ 5.

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¶ [65]. Additionally, it would take at least 6 month to rectify the defect in the Drones. 184 This
adds to the impracticability, as the primary reason for the Respondent to enter into the contract
with the Claimant was their ability to service the Contract expeditiously. 185 Hence, it is
submitted that the Respondent’s obligation falling due for performance after the frustrating
event occurred should be discharged. 186
C. THE RESPONDENT IS NOT LIABLE TO PAY THE AMOUNT LOST IN THE PHISHING ATTACK
¶ [66]. The Respondent discharged its duty under the SOGA187 by accepting and making
payment for the first two tranches. It is submitted that the Respondent shall not bear the loss
due to the phishing attack because: firstly, the fraud was committed by a third party (1);
secondly, the Email account of Ms. Jenny Liu was compromised because of her own negligence
(2); thirdly, there were security gaps in the IT system of the Claimant (3); lastly, the Respondent
intended to make a successful transfer (4).
1. THE FRAUD WAS COMMITTED BY A THIRD PARTY
¶ [67]. The present dispute involves a case of Business Email Compromise [hereinafter
‘BEC’], a variation of spear phishing, in which spoof or fraudulent emails are directed to a
company personnel in an attempt to obtain sensitive information. 188 This technique, coupled
with executive impersonation189 by the perpetrator tricks businesses to fall prey to such frauds.
¶ [68]. Courts have held that when a fraudster assumes control of Victim A’s email account
and, impersonating Victim A, issues instructions to Victim B, who then transfers funds
intended for Victim A to the fraudster’s account, Victim A will be liable for the loss if there is
a negligence on its part.190 In disputes involving similar factual matrix, 191 it was been held that
the court has to consider which party was in a better position to prevent the fraud. 192 Hence,
it is submitted that the fraud was committed by a third and liability shall be determined by
considering which party was in the best position to avoid fraud.
2. THE EMAIL ACCOUNT OF MS. JENNY LIU WAS COMPROMISED BECAUSE OF HER OWN
NEGLIGENCE

184
Case Study, ¶ 25.
185
Id.
186
Anson, p. 498.
187
§ 31, SOGA 1930.
188
Zweighaft, p. 1.
189
Id.
190
St. Lawrence, ¶¶ 56, 57.
191
Beau Townsend, pp. 12, 17.
192
Opus Consulting Group Ltd., ¶ 15.

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¶ [69]. The credibility of the Forensic report of Meloitte Consulting is questionable as it is a

private agency, 193 appointed by the Claimant itself, 194 however, the negligence of the Claimant
can still be proved. Since the report suggests that the Firewall and encryption appliances were
continuously maintained and kept up-to-date, the mails containing viruses, worms and other
malware must have been discarded.195
¶ [70]. However, the mails below the set threshold of spam level must have been quarantined
and marked as ‘SPAM’. 196 The only possible way that the attacker got the access to the O365
account of Jenny Liu 197 was that, even after seeing the mail marked as spam, she acted upon
the suspicious phishing e-mails198 and filled up her ‘log in’ credentials herself. Hence, it is
submitted that Jenny Liu’s account was hacked because of her own negligence.
3. THERE WERE SECURITY GAPS IN THE IT SYSTEM OF THE CLAIMANT
¶ [71]. The mail accounts were not validated.199 Reverse Domain Name System [hereinafter
‘RDNS’] is a protocol used to translate the sending server IP address into its host name and
‘HELO’ is a command sent by an email server to identify itself when connecting to another
email server to start the process of sending an email. Most spam mails do not have RDNS.
Rejecting messages if sending server IP does not have a reverse DNS entry or if the reverse
DNS entry does not match HELO host are two methods often used to eliminate spams.
¶ [72]. Further, Sender Policy Framework [hereinafter ‘SPF’]. SPF maintains a DNS record
that helps to prevent spoofing and phishing by verifying the domain name from which the mails
are sent. It helps validate the origin of the mail by checking the IP address and verifying
whether that address is authorized to send mail from the user’s domain. 200
¶ [73]. Some spoofing techniques can pass the SPF check. For this, Domain Keys Identified
Mail [hereinafter ‘DKIM’] and Domain-based Message Authentication, Reporting and
Conformance [hereinafter ‘DMARC’] can be used along with SPF. DKIM authorizes sender’s
domain to sign its name to an email by using cryptographic authentication. Systems that receive
email from sender’s domain can use this digital signature to help determine if the email that

193
Clarifications, q. 17.
194
Clarifications, q. 59.
195
Case Study, Annx 5, IT systems and policies, ¶ 6.
196
Case Study, Annx 5, IT systems and policies, ¶ 7.
197
Case Study, Annx 5, Summary of Key Findings, ¶ 2.
198
Case Study, Annx 5, Summary of Key Findings, ¶ 1.
199
Case Study, Annx 5, IT systems and policies, ¶ 8.
200
SPF, ¶ 2.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

they receive is legitimate.201 DMARC further helps receiving mail systems determine what to
do with messages sent from sender’s domain that fail SPF or DKIM checks. 202
¶ [74]. If the Claimant had used RDNS/HELO check, the Claimant’s server would have been
safe from spam messages. Further, SPF check could have identified the unauthorized mail from
J. Liu to Ms. Chakma because the sender’s IP address was not authorised to use Claimant’s
domain. Since the spoofed accounts were CC to the same mail, the Respondent did not suspect
any further exchanges in the same thread.
4. THE RESPONDENT INTENDED TO MAKE A SUCCESSFUL TRANSFER
¶ [75]. The Respondent had the motive of effectuating a successful transfer. The Respondent
asked for the changed bank account details at the earliest to make the payment on time. 203
Further, an effort was made to verify the relationship between the Claimant and its subsidiary
before making the payment, by asking for a letter from a local chamber of
commerce. 204Additionally, the Respondent acted promptly on the request of the Claimant of
trying to get the transaction reversed by the bank. 205
¶ [76]. Thus, the Respondent acted in good faith at all the instances. However, the mutual
obligation of effectuating a successful transfer was not fulfilled by the Claimant as they failed
acknowledge the receipts on time. Hence, it submitted that the Respondent intended to make a
successful transfer and due to the unprofessional attitude of the Claimant the fraud took place
and money could not be recovered. Therefore, the Respondent is not liable to pay the lost
amount.
¶ [77]. CONCLUSION TO THE FOURTH ISSUE: In conclusion, it is submitted, that the
Respondent had already made the payments for the due amount. The third tranche was rejected
and the contract was also frustrated. Further, the Phishing attack happened due to the
negligence of the Claimant itself. Therefore, NPPC should not be liable for the breach of its
obligations under Clause 3(1)(b), 3(1)(c) and 3(1)(d) of the contract.
V. ABC GMBH IS IN BREACH OF CLAUSE 1 OF THE AGREEMENT

¶ [78]. Each unit was tested prior to their dispatch206, still the Drones fell short of the quality
which was required to use them for the intended purpose. Thus, the Respondent submits that
the Claimant is liable for the breach of Clause 1 and for the damages caused, because: firstly,

201
DKIM, ¶ 1.
202
DMARC, ¶ 1.
203
Case Study, Annx 3 (09th Oct, Lakshmi Chakma to Jenny Liu @ 1:15:20 pm).
204
Case Study, Annx 4.
205
Case Study, Statement of Facts, ¶ 19.
206
Clarification, q. 21.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

there was an implied condition as to the quality of goods as the Drones were sold on description
(A); secondly, the Respondent is entitled to remedy under the SOGA 1930 and the defence of
Clause 10 and 11 of the Contract is not available to the Claimant (B).
A. THERE WAS AN IMPLIED CONDITION AS TO THE QUALITY OF GOODS AS THE DRONES
WERE SOLD ON DESCRIPTION

¶ [79]. The Contract provides for the specification of goods. 207It means that the description of
the Drones was explicitly mentioned in the Contract and it was a sale of goods with description.
It is submitted that the goods were not fit for purpose because: firstly, there was an implied
condition as to the quality of goods (1); secondly, the purpose of purchasing the drones were
communicated to the Claimant (2); and lastly, the Respondent relied on the skill and judgement
of the Claimant (3).
1. THERE WAS AN IMPLIED CONDITION AS TO THE QUALITY OF THE GOODS
¶ [80]. When goods are sold with a description, there is an implied condition that the goods
shall correspond with the description208 and failure to supply goods answering the description
in the contract is a total failure to perform it, 209 and not merely a breach of one term of it.210
¶ [81]. In the present case, the Claimant described TRC 2645 as their latest product with the
latest algorithm integrated that allows it to easily identify violent actions and alert the
authorities. 211 Thus, the Claimant’s failure to supply the Drones answering the description, as
the drones failed to identify the violent action, is not just a breach of warranty, but non-
performance of the contract itself. Hence, it is submitted that there was implied condition as to
the quality of goods which the Claimant did not fulfil.
2. THE PURPOSE FOR PURCHASING THE DRONES WAS COMMUNICATED TO THE CLAIMANT
¶ [82]. When the buyer makes known to the seller the purpose for which the goods are required
so as to rely on the seller’s skill or judgment and the goods described are in the course of seller’s
business, then the goods shall be reasonable fit for such purpose.212 The principle is also duly
recognised in the Convention for the International Sale of Goods.213
¶ [83]. In the present case, the Respondent set out their requirements when they approached
the Claimant214 and the mails mentioned that both the parties have had deliberations related to

207
Case Study, Annx 1, Clause 1.
208
§15, SOGA 1930.
209
Chanter, p. 404.
210
Sarabji quoted in Mulla I, p. 151.
211
Case Study, Annx 3 (23rd Sept, Peter Shultman to O.M. Jagadish @ 4:38:30 pm).
212
§ 16(1), SOGA 1930.
213
Art. 35(2)(b), CISG 1980.
214
Case Study, Statement of Facts, ¶ 7.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

the requirements of the Respondent. 215Hence, it is submitted that the purpose for which the
Respondent intended to use the drones were known to Claimant.
3. THE RESPONDENT RELIED ON THE SKILL AND JUDGEMENT OF THE CLAIMANT
¶ [84]. When the particular purpose for which goods were purchased is made known to the
seller, 216 then there is no distinction between whether the goods are in esse or not. It is
immaterial whether the buyer had the opportunity of inspecting them, or he availed the
opportunity or not.217 However, to show that that reliance is placed on the expertise of the
seller, the circumstances must be ascertained in each case individually. 218
¶ [85]. In the present case, the Claimant had a proven record of supplying Drones to law
enforcement agencies across Europe219 for surveillance purposes.220 The Claimant
acknowledged the same in their correspondence 221 with the Respondent and suggested that its
product TRC 2645 will be suited for Respondent’s purpose. 222The Respondent relying on the
skill and judgement of the Claimant 223 bought the product for the purpose of deploying the
Drones with a facial recognition software to supplement the efforts of the police in identifying
the perpetrators224 so that necessary counter measures can be taken when the protest turns
violent. However, the Drones were not fit for this purpose as they inexplicably malfunctioned
and completely failed to identify the escalations of the protest.225 It failed to send any alert to
the police forces which caused large scale damage. 226 Hence, it is submitted that the
Respondent relied on skill and judgement of the Claimant in buying the drones and therefore,
there was implied condition to the quality of goods.
B. THE RESPONDENT IS ENTITLED TO REMEDY UNDER THE SOGA 1930 AND THE DEFENCE
OF CLAUSE 10 OR 11 OF THE CONTRACT IS NOT AVAILABLE TO THE CLAIMANT

¶ [86]. The Respondent submits that it should be compensated for the damages incurred
because: firstly, the damage was the result of the breach of Clause 1 (1); secondly, the event
that led to malfunctioning of Drones was reasonably foreseeable (2); and lastly, the resulting
damages were not remote (3).

215
Case Study, Annx 3, (23rd Sept, Peter Shultman to O.M. Jagadish @ 4:38:30 pm).
216
Eternit Everest, ¶¶ 12, 13.
217
Cointat quoted in Mulla I, p. 163.
218
Bianca, p. 275.
219
Case Study, ¶ 6.
220
Clarifications, q. 61.
221
Case Study, Annx 3 (23rd Sept, Peter Shultman to O.M. Jagadish @ 4:38:30 pm).
222
Id.
223
Jones, pp. 202, 203; Spencer Trading Co. quoted in Mulla I, p. 161.
224
Case Study, Statement of Facts, ¶ 5.
225
Case Study, Statement of Facts, ¶ 23.
226
Id.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

1. THE DAMAGE WAS THE RESULT OF THE BREACH OF CLAUSE 1

¶ [87]. Where there is a breach of warranty227 that the goods should be fit for a particular
purpose, the damages should be such, which naturally flow from the breach 228or are a nature
229
consequence of such defect. Further, it is necessary that the buyer should rely on the
warranty230 and act reasonably taking reasonable steps to minimise the damages. 231
¶ [88]. In the present case, the police was relying on the Drones to send alerts the moment the
protest turned violent. Due to the failure of the Drones, the alert was not sent to the police
deployed nearby and the situation went out of hand. Although, the police acted reasonably by
firing tear gas shells and water cannons to control the crowd,232 the damage could not be
avoided. Hence, it is submitted that the damage was the result of breach of Clause 1 and so the
amount can be recovered not just for the defected drones, but also for the damages for the loss
to the property, as the damages were a natural consequence of such defect.
2. THE EVENT THAT LED TO THE MALFUNCTIONING OF DRONES WAS REASONABLY
FORESEEABLE

¶ [89]. The Courts allow force majeure exemption in unusual and extreme weather conditions
which are not reasonably foreseeable. 233 Unusual weather means adverse weather conditions
which are unusual for the place or time in which it occurred.234 The historical pattern of weather
is considered to decide if the condition is adverse and unusual. 235 The Tribunal should consider
the yearly pattern of PM 2.5 levels in New Riley. It is high every year during the beginning of
winters due to a confluence of factors.236
¶ [90]. In the present case, it was communicated to the Claimant that there might be differences
between Europe and Filandria237 and it was important to see how the product works in the “real
world”. Although, October is not the official beginning of winters in Northern Hemisphere238,
the situation was not abnormal and was reasonably foreseeable as October, being a post
monsoon month, the temperature then usually drops low causing the cool air to trap the

227
§ 59, SOGA 1930.
228
Mulla I, p. 429.
229
Randall, p. 102.
230
Dobell & Co. quoted in Mulla I, p. 431.
231
Mulla I, p.431.
232
Case Study, Statement of Facts, ¶ 23.
233
Knoll, pp. 7-8.
234
Broome Construction, pp. 829, 835; Cape Ann, pp. 71, 72.
235
Knoll, pp. 16, 17.
236
Case Study, Statement of Facts, ¶ 24.
237
Case Study, Annx 3 (24thSept 2019, O.M. Jagadish to Peter Shultman @ 12:15:20 pm).
238
Clarifications, q. 73.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

pollutants in the lower atmosphere unlike the summer in which the warm air rises and takes the
pollutants with it.
¶ [91]. This causes increase in PM 2.5 level and as the preliminary test revealed that the high
PM 2.5 level was the reason that the sensors of the drones could not capture the image of
required resolution239, itself proves that the failure could have been easily avoided by the
Claimant by conducting even a basic research on geographical conditions of Filandria. Further,
the drones were not bought with the idea of usage for only in the month of October, but with
an obvious intention to use them for a long term. Hence, it is submitted that the seller cannot
discharge its liability in any case.
3. THE RESULTING DAMAGES WERE NOT REMOTE
¶ [92]. The test established in Hadley v. Baxendale240 distinguishes direct and indirect losses
under the heading of remoteness241 and provides that those damages are recoverable which are
fairly and reasonably arise naturally from the breach, or such which were contemplated by the
parties as being probable result of the breach of the Contract.
¶ [93]. In the present case, the failure of the drones in New Riley caused a large-scale damage
that could not be avoided.242 The damage naturally flowed from the breach. The drones were
supposed to process images and send information to the police within seconds to help the law
enforcement to identify when the protests turn violent and take necessary counter-measures.243
¶ [94]. Additionally, rule also allows for the damages if the special circumstance under which
the Contract was made was known to the party that breached the Contract.244 The part of the
loss that was reasonably foreseeable at the time of the Contract can be recovered. 245
¶ [95]. In the instant case, the Claimant knew about the special circumstances under which the
contract was made. This has been already established while proving that the purpose for the
purchase of drones was communicated to the Claimant.246 Further, parties acknowledged that
the harm caused by failure of the Claimant to perform would be impossible to accurately
estimate at the time of the Contract.247 Thus, it was in contemplation of the parties that
additional harm may be caused and that the Claimant is responsible to compensate for that. 248

239
Case Study, Statement of Facts, ¶ 24.
240
Hadley quoted in Robertson, ¶ 54.
241
Schwenzer, p. 199.
242
Case Study, ¶ 23.
243
Case Study, ¶ 7.
244
Anson, p. 544.
245
Victoria Laundary, p. 539.
246
Refer ¶¶ [82]-[83], Memorandum for Respondent.
247
Case Study, Annx 1, Clause 3(3).
248
Cheshire, p. 910.

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MEMORANDUM for RESPONDENT [ARGUMENTS ADVANCED]

¶ [96]. Hence, it is submitted that the resulting damages were not remote as the additional
damages were reasonably foreseeable and in contemplation of the parties. Therefore, the
Claimant shall be made liable to compensate for the damages.
¶ [97]. CONCLUSION TO THE FIFTH ISSUE: In conclusion, it is submitted, the goods were sold
on description and the Respondent relied on the skill and judgement of the seller. The Drones
were not fit for purpose because they malfunctioned. Further, the Respondent is entitled to
recover the damages because the event was reasonably foreseeable and the damages were not
remote. Therefore, the Claimant is in breach of Clause 1.

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MEMORANDUM for RESPONDENT [PRAYER]

PRAYER

In light of the above submissions, counsel for Respondent respectfully requests that:

I. The Arbitral proceedings should be stayed pursuant to the Supreme Court’s order;
II. The Tribunal should allow public disclosure of the proceedings;
III. The issue of validity of contract is non-arbitrable;
IV. The tribunal should hold that NPPC is not in breach of lause 3(1)(b), 3(1)(c) and 3(1)(d)
of the agreement; and
V. The tribunal should hold that ABC GmBH is in breach of clause 1 of the agreement and
grant appropriate damages.

PLACE: Bangalore sd/-

DATE: 28/04/2020 COUNSEL FOR THE RESPONDENT

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